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Triffin v. Mellon PSFS

June 30, 2004


On appeal from Superior Court of New Jersey, Special Civil Part, Burlington County, Docket No. DC-7016-01.

Before Judges Skillman, Coburn and C.S. Fisher.

The opinion of the court was delivered by: Fisher, J.A.D.


Argued April 27, 2004

We are required to consider whether an assignee has standing to bring an action based on a bank's alleged failure to meet the"midnight deadline" regarding two checks paid by his assignor. We disagree with Triffin v. Bridge View Bank, 330 N.J. Super. 473 (App. Div. 2000), and conclude that such an assignee is entitled to prosecute the claim. While the trial judge relied on Bridge View Bank in finding plaintiff Robert J. Triffin lacked standing to sue -- a determination which we reject -- the dismissal of the action will nevertheless be affirmed because no evidence was produced at trial to support the claim that defendant Mellon PSFS violated the"midnight deadline."


This action involves two checks purporting to have been made by defendant Current Food Concepts BW, Inc., which does business as two Burger King franchises, one in Philadelphia and the other in Pennsauken. The first was a $335.14 check, dated August 15, 2001, payable to Shennell S. White, and the other was a $365.14 check, dated August 20, 2001, payable to Nikeya R. Howard. There was no dispute that these checks did not come from Current Food's check stock and were not signed by an authorized representative of Current Food.

On August 22, 2001, the checks were cashed by Check Cashing Services, Inc., and deposited in Check Cashing's account with First Union National Bank. First Union then forwarded the checks to Mellon, the payor bank. Mellon apparently paid the checks and charged the account of its customer, Current Food.

The ripple effect caused by these transactions was soon felt by Current Food. On or about August 25, 2001, a Mellon representative notified Current Food that its account was overdrawn. Around September 10, 2001, Current Food received from Mellon Bank its bank statement and cancelled checks, which confirmed that Current Food had been victimized by counterfeits, including the two checks in question.

Current Food executed affidavits of forgery, and Mellon thereafter reimbursed Current Food's account. First Union then reimbursed Mellon and charged the account of its customer, Check Cashing. As a result, the loss caused by these counterfeit checks fell upon Check Cashing, which soon thereafter assigned its claims to Triffin.

Triffin filed a complaint in Special Civil Part against Mellon, Current Food, and the two payees. He later voluntarily dismissed his claim against Current Food and, apparently, never served the payees with process. After a non-jury trial, the judge followed Bridge View Bank and dismissed the claim against Mellon. Triffin argues on appeal that the trial judge erred because his claim was not based on the midnight deadline set forth in N.J.S.A. 12A:4-302, as in Bridge View Bank, but on 12 C.F.R. §229 (Regulation CC). Because we conclude that Regulation CC is essentially a mirror image of the Uniform Commercial Code sections applicable to this case, we reject Triffin's argument that his sole reliance on Regulation CC, undoubtedly to avoid the precedential effect of Bridge View Bank, is a distinction which makes a difference.

Regulation CC was not intended nor does it have the effect of uprooting the Uniform Commercial Code. Instead, the Board of Governors of the Federal Reserve System, in adopting Regulation CC pursuant to the authority of the Expedited Funds Availability Act, 12 U.S.C.A. §4001 to §4010, intended to"supersede any inconsistent provisions of the U.C.C. as adopted in any state, or of any other state law, but only to the extent of the inconsistency." 12 C.F.R. §229.41 (emphasis added). See also 12 U.S.C.A. §4007(b); N.J.S.A. 12A:4-103, Uniform Commercial Code comment 3. Since Triffin has not demonstrated how Regulation CC is inconsistent with N.J.S.A. 12A:4-302, as applied here, neither the Supremacy Clause nor Regulation CC itself requires the disregarding of the Uniform Commercial Code. Accordingly, we examine the issues raised with reference to state law and, therefore, must consider whether the holding announced in Bridge View Bank should be followed.


In Bridge View Bank, the court considered"whether under the Uniform Commercial Code the assignee of a dishonored check has standing as against the payor bank to enforce the statutory liability created by N.J.S.A. 12A:4-302 when the bank misses the midnight deadline of N.J.S.A. 12A:4-104 and 12A:4-301 for returning or dishonoring the check," and held that"an assignee who purchases the check with notice of the dishonor lacks standing to bring the action." 330 N.J. Super. at 474. Bridge View Bank followed other authorities in concluding that the rights created by the midnight deadline were"intended solely for the payee, others who may have received the check before dishonor, and collecting banks." Id. at 477 (citing Lawyers Title Ins. Corp. v. United Am. Bank of Memphis, 21 F. Supp. 2d 785 (W.D. Tenn. 1998); American Title Ins. Co. v. Burke & Herbert Bank & Trust Co., 813 F. Supp. 423 (E.D. Va. 1993), aff'd, 25 F.3d 1038 (4th Cir. 1994); 7 Ronald A. Anderson, Uniform Commercial Code, ยง4-302:31 (3d ed., 1995 rev.)). We disagree and conclude that a claim based upon a breach of the midnight deadline ...

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